Saturday, February 27, 2010

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

Neither the US financial press nor the US bank leaders take the sovereign debt crisis seriously. Even the USCongress seems totally unaware of the growing global intolerance for government debt out of control. The immediate issues are rollover of short-term debt, size of the overall debt burden, borrowing costs to sustain the debt, annual deficits that accumulate further debt, and size of debt versus economic size. The United States projects a certain degree of arrogance that foreigners must continue to finance the USGovt debt at a time when the evidence gathers on loud suspicious activity in the USTreasury auctions coming to the surface. The US travels down a road to debt default also, as the mask of corrupt USTBond management is removed. The plight of Europe will strike the United States and United Kingdom, as contagion is ripe. The claim of crisis containment incites laughter finally, whereas claims of subprime containment should have but did not two years ago. The Euro currency has finally begun to stabilize, which will make all the more apparent a global bull market in the Gold price. The Gold price in almost every major currency is rising. In the US$ it will be last. Pressure on the USDollar will be frighteningly fierce at a later point in time, since the USTreasurys will be defended in the usual way, with the money master machines. Risk will shift to the US$.

USTREASURY AUCTION BID RESULTS

Analysts have noticed the drop-off in Indirect Bids, which means central banks participate less. Analysts have noticed the lack of identification of Direct Bids, which means the USGovt is ineffectively concealing their internal bids as they monetize the debt. Analysts have noticed the new ledger item called Household as bidder, which reeks of fictional accounting in creation of a catch-all category, more concealment. The USFed and USDept Treasury can no longer hide their enormous monetization of USGovt debt. Some reports mention that bond professionals are extremely anxious about the results of recent USTreasury auction. A huge jump in the Direct bidders took 24% of the auction supply. The apparent lack of transparency (no details) behind this group has increased speculation that the USFed could be directly buying its own auctions, so as to prevent both an auction failure and a sudden rise in yields. Safe haven, obviously not!

The Indirect bidders ledger item is widely viewed as the most important category. It defines the success or failure of the auction, since foreign central banks are entered from this category. A 30-year bond auction came in with a pathetic 28% bid as Indirect, far below the 36 to 40% levels seen across year 2009. This is worth watching for establishment of trend before billboard alarms (AMBER ALERT) are made. The Direct bid ratio (in yellow series, not a bar) looks fishy. The USFed & USDept Treasury would use this category to attempt to hide the elephant in the living room, calling it an extra oversized sofa with hair. Failure to identify these mythical bidders will fuel speculation of devious disguise of monetization, far greater than the official Quantitative Easing programs that are heralded as coming to an end in mid-March. The ugliest deception is the usage of the Household category to pretend that Fannie Mae and its adopted clan are actually buying USTreasurys. Press networks are oblivious. See past Hat Trick Letter member reports for details, fully cited and analyzed.

A napkin argument is relevant here. The foreign accumulation of new USTreasury debt is tiny compared to what official USTBond debt is issued and auctioned. Nobody seems to be capable of primary school mathematics, once graduation to Wall Street and USGovt service is achieved. If new debt is five times what foreigners are buying, then after factoring the domestic bond fund absence like PIMCO (they detest bonds nowadays), one can quickly conclude that the USFed/Treasury tarnished tagteam is monetizing 60% to 80% of all new debt issuance. Isolation is here, but must be more fully recognized.

USTREASURY DEFAULT RUMBLINGS

The Greek tragedy has an American conclusion. It is written in stone, but US leaders and the US population are blinded by a generation of dominance and privilege. Like a tsunami, the tragedy will strike the WashingtonDC shores and shred its financial seawalls. A sequence is at work, with Southern Europe next in line, then England, finally the United States. The financial foundation data demands it. The denials ignore reality. The isolation of the USGovt debt finance machinery, and exposure of its abused Printing Pre$$ assure a default event, or at least a path to such a default. It will probably not be properly recognized.

Little do the US bankers and leaders seem aware, but the Greek crisis will circle the globe and strike America. The initial trumpet was Dubai, actually with a colder prelude in Iceland that struck both British and Dutch banks. Dubai hit home in a special way, since it meant the credit crisis had struck again, the problem not resolved. In fact, nothing has been resolved, as all things debt related are greater in magnitude and suffering from worse leverage. The PIIGS nations of Europe are all soon to be swept away and forced to suffer the shame of debt default, a return to former domestic currencies, and steep currency devaluations, amidst considerable contract adjustments. Many of their banks will fail in the wake. The sovereign debt crisis will be be confined to the smaller European nations. It will spread to the United Kingdom and the United States, the greatest debt and bond offenders. They have abused debt in sustenance of financial asset bubbles kept aloft in grandiose juggling acts. They have abused debt to preserve the imperial power apparatus. What we see is a fiscal crisis of the Western world. The faulty foundation for the Euro currency and EU economies is the crux of the current problem under the microscope, since no mechanism exists for a bailout of any government by the European Union, other member states, or the European Central Bank. Short of withdrawing (or being expelled) from the European Union, the only options for Greece are to reduce the deficit, default on government debt, or receive a bailout. No decision will be quickly or easily reached. As stated before, German leaders will pretend to offer assistance, attach difficult conditions for aid, and walk away when not met. They want expulsion and an end to $300 billion in annual welfare for wrecked nations carried in the South, an end of grand damage to the German savings and standard of living.

The flaws of chronic government deficits, expanding government functions, and fractional banking have resulted in what Niall Ferguson of the Financial Times calls the fractal geometry of debt. Most Western economies are vulnerable, including the largest, as contagion is ripe. The Keynesian approach has very possibly run its course, without recognition by those who continue to pull its debt levers and expect similar effects as seen 20 years ago. For two years, the Hat Trick Letter has claimed a painful systemic cycle is in progress in a global restructure of monetary and banking systems, which no longer function effectively. Governments find themselves helpless to promote growth, as the hallowed multipliers are out of gear altogether. Stimulus rings hollow, only to be tried repeatedly without a learning process. Globalization has rendered the older industrialized economies vulnerable, with their higher wages, pollution control costs, financial engineering wizardry, and regulatory burdens. The increasingly common practice of pushing sovereign debt to short-term scheduled rollovers has begun to backfire. That trend began in the 1990 decade, now in backfire mode.

Debt default, just like for businesses, tends to occur when debt rollover cannot be refinanced. As the crisis intensifies inside Europe, the USDollar rises in an apparent Zero Sum game. Funds are in migration away from the Euro currency wherever possible. The rising US$ exchange rate actually weakens the prospects for a USEconomic recovery, where re-industrialization is urgently needed. That is correct. The US must rebuild its factories and promote export businesses, a reform nobody in the USCongress or Wall Street dare mention. The higher US$ exchange rates translate to a double edged sword, higher export prices from the US producers and higher cost structures to the foreign economies. See the commodity index in Euro terms. The bankers and politicians in Europe must halt the Euro decline, or else face rising systemic costs across the European Union economy. The stimulus for exporters with a lower Euro has a nasty consequence to control, with costs. Their price inflation at all levels is rising fast. Watch the Euro stabilize.

RECOGNITION OF HIGH US DEBT RISK

USGovt debt is a disaster, not the least a safe haven. The new 2010 budget is projected even by White House estimates to exceed 100% of GDP within two years. The long-run projections of the US Congressional Budget Office suggest that the US will never again run a balanced budget, as in NEVER. Both this year and last year, the federal deficit is near 10% of GDP, the size of the national economy and new standard measure of limited tolerance. Heavy debt burdens, in addition to diverse insolvency (in households, federal, banks, and trade) create a tremendous drag on economic growth. Two main forces prevent higher USTreasury Bond yields. The purchase of USTreasury & USAgency Mortgage Bonds by the USFed & USDept Treasury in major monetization operations is the domestic solution. The purchase of the same bonds by Chinese, Japanese, British, and OPEC nations is the foreign solution. With the mid-March plan to halt the USGovt official Quantitative Easing program, and the outright sales by the Chinese of USTreasurys, the ISOLATION HAS BEGUN. The risk stands squarely with the USDollar. JPMorgan will quietly continue to buy USTBonds and control long-term rates the usual way, by force, with heavy usage of Interest Rate Swaps, their secret device. Not only are USTreasurys in a bubble, they are the most controlled market.

Last week Moodys Investors Service warned that the Aaa credit rating of the USGovt should not be taken for granted. The premier rating will come under pressure in the future unless additional measures are taken to reduce chronic budget deficits. Niall Ferguson wonders about the clarion call by Larry Summers, who asked the quintessential question before he returned to work for the Obama Admin. Summers appropriately asked, "How long can the world's biggest borrower remain the world's biggest power?" Upon reflection, the sovereign debt crisis of the West has begun in Greece, the birthplace of Western civilization. Soon it will traverse the channel to Great Britain, the home of the last great Empire. The crisis will reach the last bastion of Western power, on the other side of the Atlantic. The United States will face a steady stream of powerful shocks to its sprawling Empire, supported in recent years by extraordinary means and historical controversy. The global reserve currency will not prevent the credit crisis from hitting USGovt debt. My forecast is for a technical USTreasury default, without full recoginition, even while the USGovt is given a sterling debt rating out of coerced generosity.

Taleb advises a short of USTreasurys. He points to a broken USGovt fiscal condition, reckless bank leadership, and a situation actually worse than a year ago (not better). Reform is nowhere. Dysfunction is entrenched. Nassim Taleb, author of "The Black Swan" advises each and all should invest against the USTreasury Bonds, and to anticipate their decline. He was specific, that as long as Bernanke is USFed Chairman and Lawrence Summers is White House economic adviser, the Obama Admin will conduct policy in a manner to bring a path to ruin for USTreasurys. In the last two years, the USFed and USGovt have lent, spent, or guaranteed $9.66 trillion to lift the USEconomy from the worst recession since the Great Depression, according to data compiled by Bloomberg. The results have hardly even achieved stability. Conditions have deteriorated enough to result in annual $1.5 trillion budget deficits, mostly inherited from the past administration. Taleb said, “Deficits are like putting dynamite in the hands of children. They can get out of control very quickly. The problem we have in the United States, the level of debt is still very high and being converted to government debt. We are worse off today than we were last year. In the United States and in Europe, you have fewer people employed and a larger amount of debt. Democracies cannot handle austerity measures very well. We are going to have a severe problem." He referred to cutting USGovt spending, with the usual suspects. Fiscal spending cuts are to occur in the Second Half, as in year 2012 or 2013. Debt risk has shifted from private to government, this is the major risk trend.

The litmus tests of USTreasury deep instability are A) the recognized monetization of USGovt debt, B) the size of the USGovt deficits, and C) the inability for the USEconomy to recover from insolvency. All three tests are in the process of failing here and now, raising attention for eventual default. As a result, Moodys issued a statement on the USGovt debt rating. It should be junk bond B level grade. Some claim that none of the major debt rating agencies will downgrade the USGovt debt. It could happen. Moodys stated, "The ratios of general government debt to GDP and to revenue are deteriorating sharply, and after the crisis they are likely to be higher than the ratios of other Aaa rated countries. If the current upward trend in government debt were to continue and become irreversible, the rating could come under downward pressure. The trend and the outlook would be more important than any particular level of debt." The more likely outcome is a serious decline in the USDollar after a more clear certain path for Europe. A repaired, reformed, renewed smaller Euro currency would be the potential death knell for the USDollar. The European continent will consolidate, an event certain to return attention to crippled USGovt and USEconomic financial conditions.

EURO CURRENCY UNCERTAINTY

The continent of Europe has never in at least three decades been more uncertain in its future. The European Monetary Union had a flawed plan for shared common currency usage, whose failure was forecasted (not by the Jackass) by critics to its architecture upon its birth in 1989. In the last several weeks, the plight of the deeply indebted and broken insolvent Southern European nations has dragged down the Euro currency. Uncertainty abounds on eventual debt rescue for Greece. For hereditary genetic reasons, for national welfare backlash reasons, for systemic design deficiency reasons, the Euro will see expulsions. It will not face ruin, but instead face consolidation. Germany leads the process, and will force out Greece, then Italy, later Spain & Portugal. Their nationally marked Euro Bonds have been trading at non-German levels for over two years. Such is a clear indication of multiple Euros masquerading as a common currency, inviting arbitrage and breakdown.

The Euro currency chart shows signs of stability. The price action in the last two weeks seems to loudly indicate stability seen in the Doji Stars, marked by open and close nearly equal, but with noisy intraweek high and low. The stochastix have been oversold for two solid months. The technical traders in the vast FOREX pits have started to cover their massive shorts. The attempt to establish the Euro as the basis of a new carry trade in my view will be interrupted by the Germans, who will let Athens go to perdition. The Greeks will not be able to make interest payments. The nasty fact of life is that Greek Govt debt is scattered all over banks in Germany, France, England, and Switzerland. So expect powerful ripple effects to debt default and bond writedowns. A key to watch is riots. The Gold price will rise in US$ terms when the Euro shows signs of a leveling process. One danger signal to keep an eye on is the 20-week moving average crossover of the 50-week moving average. The Doji Stars oppose the MA Crossover, the former hinting of a rally upward, the latter hinting of a continued leg down to the 130 level.

A predictable aberration is evident. Whenever the USTreasurys look like they are on the brink of a meaningful breakdown, a Stock decline occurs, and funds flow heavily into USTreasurys. Last week, the Gold in Euros price chart showed an early breakout. The Gold price advance in Euro denomination should be interrupted when the Euro achieves some stability. The beginning of a rally in Gold in all currencies seems underway, a movement kicked off by the European debt problems. The Gold breakout in Euro terms is possibly soon to be joined by breakouts of Gold in British Pounds, Gold in Japanese Yen, and Gold in Swiss Francs, with the Gold breakout in USDollars last. When the surge is universal, like in South African Rands, Brazilian Real, Thai Bhats and even Vietnamese Dongs, Gold will be perceived as a currency in full direct competition with the tainted fiat paper currencies! The Zero Sum game concept will be tossed aside, as gold gains in one currency will not necessitate gold losses in another currency.

Do not be fooled by a correction in the Gold price in US$ terms. It is rising broadly across foreign currencies, in an environment of extreme gold bullion shortage. The end of the Q1 gold price correction is near. Many investors sense nothing happening in the gold arena. Not true! The entire foundational structures for the fiat monetary system are crumbling under the financial market floors. The support pillars are fragile and weak if not vanished and missing. The Powerz keep the game going for their further advantage. Reform and remedy is not their plan.

VULNERABLE EUROPEAN BANKS

A Pan-European sovereign debt crisis is unfolding, appreciated in Europe, minimized in the United States. After removing mountains of ruined bonds from private banks, government debt risk is extremely acute. A trade took place, transferring risk from big banks to the government balance sheets. In the process, sovereign debt has weakened dangerously even as the debt problem has been amplified. The implicit leverage has effective been increased, but without benefit of the natural firewalls installed at financial institutions. Furthermore, and worse, European banks have an order of magnitude more assets than their economic size. A default cascade comes, as leverage is out of control. A run on private banks is assured. For at least Europe, debt is not resolvable and tolerance is nil. The Greek chapter might be a diversion from the core problem soon to erupt. Excess liabilities and leverage make for a witch's brew. The de-leverage process will knock many structures to the ground. Europe has a recent history replete with riots in urban streets, more than anywhere in the Western world. Expect riots across all Southern Europe. Instead of a domino effect like what was feared by the Lehman collapse, a domino effect is at risk of slamming sovereign debt on a global basis. The process is beginning. See the mammoth private bank assets in the chart below, which easily eclipse their national economic sizes. Leverage is enormous in Europe, just like in the United States and England. Notice several Greek banks with adjusted leverage of nearly 90 times, whose assets are nearly 30% of the Greek GDP. Thanks to Reggie Middleton for an excellent graph, and an excellent point to make.

DOOMED SOVEREIGN ALCHEMY

A leading bank analyst believes that ultimately, sovereign alchemy will fail. Egon von Greyerz is manager of the Matterhorn Asset Mgmt fund. He said, "When we look at the world economy today, wherever we turn, we see a wall of risk. And sadly this is an insurmountable wall of risk with risks that are totally unprecedented in history. There has never before been a potentially catastrophic combination of so many virtually bankrupt major sovereign states (US, UK, Spain, Italy Greece, Japan, and many more) and a financial system which is bankrupt but is temporarily kept alive with phony valuations and unlimited money printing. But governments will soon realise that they are not alchemists who can turn printed paper into gold. The consequences of the global financial crisis are potentially catastrophic." He describes an era coming to a close. The era was identified by a grand illusion, that governments through their central bankers could create prosperity from virtually unlimited money creation, vast expansion of debt, and migration away from industry. It will end in disaster. The folly was an insult to Economic Mother Nature. See "Sovereign Alchemy Will Fail" on the Matterhorn website (CLICK HERE).

Von Greyerz makes several key points. Investors have ignored the risks of excessive debt. They have bid up the stock and bond markets, even reduced the important spreads in bonds versus government type. He wrote, "All the so-called experts have declared that it is impossible to identify the problems in the financial system in advance. For example, Greenspan, Bernanke, Geithner, other central bankers, and government officials as well as Blankfein of Goldman Sachs and many bank heads have all stated that they could not see it coming. Either they are lying or they are stupid. Sadly, it is most likely the former... The plight of the US states is just as bad. Out of 50 states, only 4 are expected to have a balanced budget in 2010. Up to 40 states, including California, New York, Florida, Illinois, Michigan, Ohio, North Carolina, and New Jersey, are virtually bankrupt. It took almost 200 years for US Federal debt to reach $1 trillion which it did in 1981. In 2009 the debt increased by $1.9 trillion in just that year to $ 12.4 trillion. In the next ten years the US debt is forecast to reach $ 25 trillion." Debt is accelerating, typical of any bubble. Its finance will be impossible.

The policy choices are all bad, since bankers and servile politicians have backed themselves into the corner. What remains are 'Lose-Lose Options' clearly. Governments must continue to borrow and print money or they can reduce government spending. Each choice leads to ruin. Proposed austerity programs forced upon European nations are better described as Poison Pills, the outcome of which is a death spiral in grand deficits, new debts, and economic recessions. The travesty is seen with imposed national deficits forced upon Greece, and soon Italy & Spain, below the 3% level. Not one single country within the EU abides by the 3% limit versus GDP, not even the alpha nation Germany. The effect of the austerity programs will lead to such a major contraction of the economies that tax revenues will collapse, further exacerbating the plight of these countries.

The alternative for governments, within the crumbling European Union and the deteriorating United States, is to print or borrow more money. Then print more. Against a backdrop of rising deficits, rising unemployment, and persistently insolvent banking systems, they have no choice. The vast channels of funds cannot be stopped. The end game will be paved by hyper-inflation, worse than even what is seen today. Von Greyerz wrote, "Both the UK and the US are set upon a course of self-destruction. We will see trillions of pounds and dollars printed in the next few years. But the only buyers of these government securities will be the US and UK governments. The rest of the world will dump their holdings which will result in both the dollar and the pound dropping precipitously and interest rates rising substantially.. The effect of a collapsing currency will be a hyper-inflationary depression. This is the inevitable outcome for the UK and US, and there is sadly no action that the governments of these countries can take to alter this course." The Knucklehead Deflationists have misjudged all along the avalanche of printed money, the currency risks, the supply output disruption, and the need for vast channeled funds in illicit diversion. Their simplistic lenses are inadequate for vision. The outcome is gradual arrival of price inflation, tepid at first, a torrent later when the monetary crisis reaches full bloom with a USDollar epicenter. Its accelerant is the attempted drive toward normalcy, away from accommodation, which cannot even remotely occur.

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When the Industrial Revolution began in Britain, in the late 1700s, there was lots of money to be made by investing in factories and mills, by opening up new markets, and by gaining control of sources of raw materials. The folks who had the most money to invest, however, were not so much in Britain but more in Holland. Holland was the leading Western power in the 1600s, and its bankers were the leading capitalists. In pursuit of profit, Dutch capital flowed to the British stock market, and thus the Dutch funded the rise of Britain, who subsequently eclipsed Holland both economically and geopolitically.

In this way British industrialism came to be dominated by wealthy investors, and capitalism became the dominant economic system. This led to a major social transformation. Britain had been essentially an aristocratic society, dominated by landholding families. As capitalism became dominant economically, capitalists became dominant politically. Tax structures and import-export policies were gradually changed to favor investors over landowners.

It was no longer economically viable to simply maintain an estate in the countryside: one needed to develop it, turn it to more productive use. Victorian dramas are filled with stories of aristocratic families who fall on hard times, and are forced to sell off their properties. For dramatic purposes, this decline is typically attributed to a failure in some character, a weak eldest son perhaps. But in fact the decline of aristocracy was part of a larger social transformation brought on by the rise of capitalism.

The business of the capitalist is the management of capital, and this management is generally handled through the mediation of banks and brokerage houses. It should not be surprising that investment bankers came to occupy the top of the hierarchy of capitalist wealth and power. And in fact, there are a handful of banking families, including the Rothschilds and the Rockefellers, who have come to dominate economic and political affairs in the Western world.

Unlike aristocrats, capitalists are not tied to a place, or to the maintenance of a place. Capital is disloyal and mobile – it flows to where the most growth can be found, as it flowed from Holland to Britain, then from Britain to the USA, and most recently from everywhere to China. Just as a copper mine might be exploited and then abandoned, so under capitalism a whole nation can be exploited and then abandoned, as we see in the rusting industrial areas of America and Britain.

This detachment from place leads to a different kind of geopolitics under capitalism, as compared to aristocracy. A king goes to war when he sees an advantage to his nation in doing so. Historians can 'explain' the wars of pre-capitalist days, in terms of the aggrandizement of monarchs and nations. A capitalist stirs up a war in order to make profits, and in fact our elite banking families have financed both sides of most military conflicts since at least World War 1. Hence historians have a hard time 'explaining' World War 1 in terms of national motivations and objectives. In pre-capitalist days warfare was like chess, each side trying to win. Under capitalism warfare is more like a casino, where the players battle it out as long as they can get credit for more chips, and the real winner always turns out to be the house – the bankers who finance the war and decide who will be the last man standing. Not only are wars the most profitable of all capitalist ventures, but by choosing the winners, and managing the reconstruction, the elite banking families are able, over time, to tune the geopolitical configuration to suit their own interests. Nations and populations are but pawns in their games. Millions die in wars, infrastructures are destroyed, and while the world mourns, the bankers are counting their winnings and making plans for their postwar reconstruction investments.

From their position of power, as the financiers of governments, the banking elite have over time perfected their methods of control. Staying always behind the scenes, they pull the strings controlling the media, the political parties, the intelligence agencies, the stock markets, and the offices of government. And perhaps their greatest lever of power is their control over currencies. By means of their central-bank scam, they engineer boom and bust cycles, and they print money from nothing and then loan it at interest to governments. The power of the banking elites is both absolute and subtle...

"Some of the biggest men in the UnitedStates are afraid of something. Theyknow there is a power somewhere, soorganised, so subtle, so watchful, sointerlocked, so complete, so pervasivethat they had better not speak abovetheir breath when they speak incondemnation of it." -- President Woodrow Wilson

The end of growth – capitalists vs. capitalism

It was always inevitable, on a finite planet, that there would be a limit to economic growth. Industrialization has enabled us to rush headlong toward that limit over the past two centuries. Production has become ever more efficient, markets have become ever more global, and finally we have reached the point where the paradigm of perpetual growth can no longer be maintained.

Indeed, that point was actually reached by about 1970. Since then capital has not so much sought growth through increased production, but rather by extracting greater returns from relatively flat production levels. Hence globalization, which moved production to low-waged areas, providing greater profit margins. Hence privatization, which transfers revenue streams to investors that formerly went to national treasuries. Hence derivative and currency markets, which create the electronic illusion of economic growth, without actually producing anything in the real world.

If one studies the collapse of civilizations, one learns that failure-to-adapt is fatal. Continuing on the path of pursuing growth would be such a failure to adapt. And if one reads the financial pages these days, one finds that it is full of doomsayers. We read that the Eurozone is doomed, and Greece is just the first casualty. We read that stimulus packages are not working, unemployment is increasing, the dollar is in deep trouble, growth continues to stagnate, business real estate will be the next bubble to burst, etc. It is easy to get the impression that capitalism is failing to adapt, and that our societies are in danger of collapsing into chaos.

Such an impression would be partly right and partly wrong. In order to understand the real situation we need to make a clear distinction between the capitalist elite and capitalism itself. Capitalism is an economic system driven by growth; the capitalist elite are the folks who have managed to gain control of the Western world while capitalism has operated over the past two centuries. The capitalist system is past its sell-by date, the banking elite are well aware of that fact – and they are adapting.

Capitalism is a vehicle that helped bring the bankers to absolute power, but they have no more loyalty to that system than they have to place, or to anything or anyone else. As mentioned earlier, they think on a global scale, with nations and populations as pawns. They define what money is and they issue it, just like the banker in a game of Monopoly. They can also make up a new game with a new kind of money. They have long outgrown any need to rely on any particular economic system in order to maintain their power. Capitalism was handy in an era of rapid growth. For an era of non-growth, a different game is being prepared.

Thus, capitalism has not been allowed to die a natural death. First it was put on a life-support system, as mentioned above, with globalization, privatization, derivative markets, etc. Then it was injected with a euthanasia death-drug, in the form of toxic derivatives. And when the planned collapse occurred, rather than industrial capitalism being bailed out, the elite bankers were bailed out. It's not that the banks were too big to fail, rather the bankers were too politically powerful to fail. They made governments an offer they couldn't refuse.

The outcome of the trillion-dollar bailouts was easily predictable, although you wouldn't know that from reading the financial pages. National budgets were already stretched, and they certainly did not have reserves available to service the bailouts. Thus the bailouts amounted to nothing more than the taking on of immense new debts by governments. In order to fulfill the bailout commitments, the money would need to be borrowed from the same financial institutions that were being bailed out.

With the bailouts, Western governments delivered their nations in hock to the bankers. The governments are now in perpetual debt bondage to the bankers. Rather than the banks going into receivership, governments are now in receivership. Obama's cabinet and advisors are nearly all from Wall Street; they are in the White House so they can keep close watch over their new acquisition, the once sovereign USA. Perhaps they will soon be presiding over its liquidation.

The bankers are now in control of national budgets. They say what can be funded and what can't. When it comes to financing their wars and weapons production, no limits are set. When it comes to public services, then we are told deficits must be held in check. The situation was expressed very well by Brian Cowan, Ireland's government chief. In the very same week that Ireland pledged 200 billion Euro to bailout the banks, he was being asked why he was cutting a few million Euro off of critical service budgets. He replied, "I'm sorry, but the funds just aren't there". Of course they're not there! The treasury was given away. The cupboard is bare.

As we might expect, the highest priority for budgets is servicing the debt to the banks. Just as most of the third world is in debt slavery to the IMF, so the whole West is now in debt slavery to its own central banks. Greece is the harbinger of what is to happen everywhere.

The carbon economy – controlling consumption

In a non-growth economy, the mechanisms of production will become relatively static. Instead of corporations competing to innovate, we'll have production bureaucracies. They'll be semi-state, semi-private bureaucracies, concerned about budgets and quotas rather than growth, somewhat along the lines of the Soviet model. Such an environment is not driven by a need for growth capital, and it does not enable a profitable game of Monopoly.

We can already see steps being taken to shift the corporate model towards the bureaucratic model, through increased government intervention in economic affairs. With the Wall Street bailouts, the forced restructuring of General Motors, the call for centralized micromanagement of banking and industry, and the mandating of health insurance coverage, the government is saying that the market is to superseded by government directives. Not that we should bemoan the demise of exploitive capitalism, but before celebrating we need to understand what it is being replaced with.

In an era of capitalism and growth, the focus of the game has been on the production side of the economy. The game was aimed at controlling the means of growth: access to capital. The growth-engine of capitalism created the demand for capital; the bankers controlled the supply. Taxes were mostly based on income, again related to the production side of the economy.

In an era of non-growth, the focus of the game will be on the consumption side of the economy. The game will be aimed at controlling the necessities of life: access to food and energy. Population creates the demand for the necessities of life; the bankers intend to control the supply. Taxes will be mostly based on consumption, particularly of energy. That's what the global warming scare is all about, with its carbon taxes and carbon credits.

Already in Britain there is talk of carbon quotas, like gasoline rationing in wartime. It's not just that you'll pay taxes on energy, but the amount of energy you can consume will be determined by government directive. Carbon credits will be issued to you, which you can use for driving, for heating, or on rare occasions for air travel. Also in Britain, the highways are being wired so that they can track how many miles you drive, tax you accordingly, and penalize you if you travel over your limit. We can expect these kinds of things to spread throughout the West, as it's the same international bankers who are in charge everywhere.

In terms of propaganda, this control over consumption is being sold as a solution to global warming and peak oil. The propaganda campaign has been very successful, and the whole environmental movement has been captured by it. In Copenhagen, demonstrators confronted the police, carrying signs in support of carbon taxes and carbon credits. But in fact the carbon regime has nothing to do with climate or with sustainability. It is all about micromanaging every aspect of our lives, as well as every aspect of the economy.

If the folks who are running things actually cared about sustainability, they'd be investing in efficient mass transit, and they'd be shifting agriculture from petroleum-intensive , water-intensive methods to sustainable methods. Instead they are mandating biofuels and selling us electric cars, which are no more sustainable or carbon-efficient than standard cars. Indeed, the real purpose behind biofuels is genocide. With food prices linked to energy prices, and agriculture land being converted from food production to fuel production, the result can only be a massive increase in third-world starvation. Depopulation has long been a stated goal in elite circles, and the Rockefeller dynasty has frequently been involved in eugenics projects of various kinds.

'The War on Terrorism' – preparing the way for the transition

The so-called War on Terrorism has two parts. The first part is a pretext for arbitrary abuse of citizen's rights, whenever Homeland Security claims the action is necessary for security reasons. The second part is a pretext for US military aggression anywhere in the world, whenever the White House claims that Al Qaeda is active there.

I emphasized the word 'claims' above, because the terrorism pretext is being used to justify arbitrary powers, both domestically and globally. No hard evidence need be presented to Congress, the UN, or anyone else, before some nation is invaded, someone is kidnapped and tortured as a 'terrorist suspect', or some new invasive security measure is implemented. When powers are arbitrary, then we are no longer living under the rule of law, neither domestically nor internationally. We are living under the rule of men, as you would expect in a dictatorship, or in an old-fashioned kingdom or empire.

Part 1: Preparing the way for a new social order

In a very real sense, the terrorism pretext is being used to undo everything that The Enlightenment and the republication revolutions achieved two centuries ago. The very heart of the Bill of Rights – due process – has been abandoned. The gulag, the concentration camp, and the secret arrest in the night – these we have always associated with fascist and communist dictatorships – and now they are not only functioning under US jurisdiction, but being justified publicly by the President himself.

Is there really a terrorist threat to the homeland, and would these measures be a sensible response to such a threat? People sre strongly divided in their answers to these questions. Quite a bit of hard forensic evidence has come to light, including links to intelligence agencies, and my own view is that most of the dramatic 'terrorist' events in the US, UK, and Europe have been covert false-flag operations.

From an historical perspective this would not be at all surprising. Such operations have been standard practice – modus operandi – in many nations, though we usually don't get proof until years later. For example, every war the US has been involved in has had its own phony Gulf of Tonkin Incident, or its Weapons of Mass Destruction scam, in one form or another. It's a formula that works. Instant mobilization of public opinion, prompt passage without debate of enabling resolutions and legislation. Why would the War on Terrorism be any different?

As regards motive: while Muslims have only suffered as a result of these dramatic events, our elite bankers have been able to create a police-state infrastructure that can be used to deal with any foreseeable popular resistance or civic chaos that might emerge as they prepare the way for their post-capitalist future.

With the collapse, the bailouts, and the total failure to pursue any kind of effective recovery strategy, the signals are very clear: the system will be allowed to collapse totally, thus clearing the ground for a pre-architected 'solution'. Ground Zero can be seen as a metaphor, with the capitalist economy as the Twin Towers. And the toxic derivatives illustrate the fact that the collapse is actually a controlled demolition.

It seems to me inevitable, given the many signals, that martial law will be part of the transition process, allegedly to deal with the problems of economic collapse. Perhaps a collapse in the food-supply chain, due to a collapse in the energy-supply chain. The US emergency responses in New Orleans and again in Haiti give us more signals, actual test trials, of what kind of 'emergency response' we can expect.

First and foremost comes the security of the occupation forces. Those suffering in the emergency are treated more like insurgents than victims in need of help. In the case of Haiti, the US response can only be described as an intentional genocide project. When people are pinned under rubble in an earthquake, the first 48 hours, and 72 hours, are absolutely critical points, as regards survival rates. When the US military systematically blocked incoming aid for those critical hours, turning back doctors and emergency teams, they sealed the fate of many thousands who could have been saved.

One can imagine many nightmare scenarios, given these various signals, these ominous signs. World Wars 1 and 2 were nightmares that really happened, with millions dying, and these same banking dynasties orchestrated those scenarios and then covered their tracks. We must also keep in mind the Shock Doctrine, where catastrophe is seen as opportunity – when 'things can be done that otherwise could not be accomplished' . We are still being impacted by the shock waves that were sent out on 9/11, and again when the financial system collapsed. And the the really big shock, the general collapse of society, is yet to come. The ultimate version of the Shock Doctrine: 'If the collapse is total, we can accomplish any damned thing we want to accomplish'.

I won't venture a guess about how this transition process will play out, but I do expect that it will be a nightmare of one description or another. Already the growing homeless population is suffering a nightmare, by any civilized standards. One day you're living in a home whose value is going up, commuting to a good job, and the next thing you know your family is out on the streets. That's a nightmare. The transition time will be a difficult time, but it will be a transition, it will be temporary, like a war. And like a war, it will enable social and economic reconstruction in the aftermath.

Consider how Japan and Germany were socially and politically transformed by the postwar reconstruction process. Those were exercises in social engineering, as were the preceding transformations under Mussolini and Hitler. Although the outcomes were quite different, in each case a total collapse / defeat was the preamble to reconstruction. A total collapse of the capitalist economy is simply the application of a proven formula. The second part of the formula will be some new social order, or perhaps some old social order, or some mixture. Something appropriate to a non-growth, command economy.

That's part 1 of the War on Terrorism: it has enabled the creation of the police-state infrastructures required to to deal with the collapse of society, and to provide security for the reconstruction process.

Part 2: Preparing the way for global domination

Part 2 of the War on Terrorism is about the geopolitical dimensions of a non-growth-based global economy. Earlier I suggested that geopolitics was different under capitalism, than it was under sovereign monarchs. The whole dynamic was different, and outcomes were weighed on a different scale. Similarly, many things will change in a shift from chaotic, growth-oriented capitalism, to a centralized, micromanaged, economic regime.

Consider, for example, the significance of control over oil reserves. In a growth economy, profits were the prize, and controlling the markets and the distribution channels amounted to holding a winning hand in the game. The local dictators could manage things as they pleased, and take their cut of oil revenues, as long as they honored their contracts with the oil majors, who were happy to sell to the highest bidders.

In a non-growth economy, where the focus is on direct control over the supply and distributions of resources, it becomes necessary to secure, in the military sense, the sources of petroleum, and the routes for its distribution. It is no longer sufficient to merely profit from unbridled operations. Securing of the sources, and directly allocating the distribution, is the foundation for micromanaging the non-growth economy. This applies to other critical resources as well, such as uranium, and the rare minerals needed by the 'defense' and electronics industries.

In fact we are in the midst of a resource-grab war, with China and Russia making long-term energy deals with Iran and Venezuela, China buying up agricultural land in Africa, Washington making long-term deals for Brazilian biofuels, and there are many other examples. In many ways imperialism is reverting to colonial days, when direct administration was the model, rather than the capitalist model: profiting from corporate investments under dictators who suppress their populations.

There is a natural reversion to the dynamics of the 'good old days of empire' when the Great Powers of Europe focused their economic activity within their individual spheres of influence. Everyone knows that global resource limits are being reached, partly from population pressures, and partly from resource-exploitati on practices. For this reason alone, we have the peaceful part of the resource-grab war.

In Iraq, Afghanistan, and now in Pakistan and Yemen, the US, with NATO support, is playing a very non-peaceful hand in the resource-grab game. It's the hand of a bully, 'I have the biggest gun, so I'll take what I want'. These aggressive actions are very provocative to Russia and China, and threatening to their vital economic interests. An attack on Iran would be more than a provocation, it would be a direct slap in the face, a challenge: 'Fight now or resign yourself to being subdued piecemeal'.

In addition to all this petroleum grabbing, the US has been surrounding Russia and China with military bases, and has recently accelerated the installations of anti-missile systems on their borders, over the strong objections of Russia and China. The US is being intentionally provocative, and it is threatening vital interests of these potential adversaries.

Alliances are being formed in response, on a bilateral basis, and in the form of the SCO. China and Russia are very close in their military cooperation, and technology sharing. Their strategic planning is based on the expectation of a US attack, and their strategic response is based on the principle of asymmetric warfare. For example, a million dollar missile capable of taking out a multi-billion dollar aircraft carrier. Or perhaps a handful of missiles capable of disabling the Pentagon's command-and- control satellite systems.

Meanwhile the US is spending astronomical sums developing a first-strike capability, with space-based weapons systems, control-of-theater capability, forward-based 'tactical' nukes, etc. The new anti-missile systems are an important part of a first-strike strategy, reducing the ability of Russia or China to retaliate. These systems are more than just provocative. They are the modern equivalent of marching your armies up to your adversary's border.

If there is a nuclear exchange between the major powers, historians will cite all of these things I've mentioned as 'obvious signs' that war was coming. Parallels would be drawn to the pre-World War 1 scenario, when Germany was eclipsing Britain economically, as China is eclipsing the US now. In both cases a 'desperate attempt to maintain hegemony' would be seen as the cause of the war.

There may or may not be a World War 3, but all of these preparations make it clear that our banking elite intend to preside over a global system, by hook or by crook. If they wanted a peaceful arrangement, a splitting of the third-world pie, so to speak, it could be easily arranged at any time, along with substantial nuclear disarmament. China and Russia would like to see a stable, multi-polar world; it is only our elite bankers who are obsessed with world domination.

It is possible that nuclear war is a 'desired outcome', accomplishing depopulation, and making the collapse even more total. Or perhaps China and Russia will be given an offer they can't refuse: 'Surrender your economic sovereignty to our global system, or face the consequences' .

One way or another, the elite bankers, the masters of the universe, intend to preside over a micromanaged global system. The collapse project is now well underway, and the 'surround your enemy' project seems to be more or less completed. From a strategic perspective, there will be some trigger point, some stage in the economic collapse scenario, when geopolitical confrontation is judged to be most advantageous. It's a multi-dimensional chess board, and with the stakes so high, you can rest assured that the timing of the various moves will be carefully coordinated. And from the overall shape of the board, we seem to be nearing the endgame.

Prognosis 2012 – a Neo Dark Age

2012 might not be the exact year, but it's difficult to see the endgame lasting much beyond that, and the masters of the universe love symbolism, as with 911 (both in Chile and in Manhattan), KLA 007, and others. 2012 is loaded with symbolism, eg. the Mayan Calendar, and the Internet is buzzing with various 2012-related prophecies, survival strategies, anticipated alien interventions, alignments with galactic radiation fields, etc. And then there is the Hollywood film, 2012, which explicitly portrays the demise of most of humanity, and the pre-planned salvation of a select few. One never knows with Hollywood productions, what is escapist fantasy, and what is aimed at preparing the public mind symbolically for what is to come.

Whatever the exact date, all the threads will come together, geopolitically and domestically, and the world will change. It will be a new era, just as capitalism was a new era after aristocracy, and the Dark Ages followed the era of the Roman Empire. Each era has its own structure, its own economics, its own social forms, and its own mythology. These things must relate to one another coherently, and their nature follows from the fundamental power relationships and economic circumstances of the system.

In our post-2012 world, we have for the first time one centralized global government, and one ruling elite clique, a kind of extended royal family, the lords of finance. As we can see with the IMF, WHO, and the WTO, and the other pieces of the embryonic world government, the institutions of governance will make no pretensions about popular representation or democratic responsiveness. Rule will be by means of autocratic global bureaucracies, who take their marching orders from the royal family. This model has already been operating for some time, within its various spheres of influence, as with the restructuring programs forced on the third world, as a condition for getting financing.

Whenever there is a change of era, the previous era is always demonized in mythology. In the Garden of Eden story the serpent is demonized – a revered symbol in paganism, the predecessor to Christianity. When republics came along, the demonization of monarchs was an important part of the process. In the post-2012 world, democracy and national sovereignty will be demonized. This will be very important, in getting people to accept totalitarian rule, and the mythology will contain much that is true...In those terrible dark days, before the blessed unification of humanity, anarchy reigned in the world. One nation would attack another, no better than predators in the wild. Nations had no coherent policies; voters would swing from one party to another, keeping governments always in transition and confusion. How did they ever think that masses of semi-educated people could govern themselves, and run a complex society? Democracy was an ill-conceived experiment that led only to corruption and chaotic governance. How lucky we are to be in this well-ordered world, where humanity has finally grown up, and those with the best expertise make the decisions.

The economics of non-growth are radically different than capitalist economics. The unit of exchange is likely to be a carbon credit, entitling you to consume the equivalent of one kilogram of fuel. Everything will have a carbon value, allegedly based on how much energy it took to produce it and transport it to market. 'Green consciousness' will be a primary ethic, conditioned early into children. Getting by with less is a virtue; using energy is anti-social; austerity is a responsible and necessary condition.

As with every currency, the bankers will want to manage the scarcity of carbon credits, and that's where global warming alarmism becomes important. Regardless of the availability of resources, carbon credits can be kept arbitrarily scarce simply by setting carbon budgets, based on directives from the IPCC, another of our emerging units of global bureaucratic governance. Such IPCC directives will be the equivalent of the Federal Reserve announcing a change in interest rates. Those budgets set the scale of economic activity.

Presumably nations will continue to exist, as official units of governance. However security and policing will be largely centralized and privatized. Like the Roman Legions, the security apparatus will be loyal to the center of empire, not to the place where someone happens to be stationed. We have seen this trend already in the US, as mercenaries have become big business, and police forces are increasingly federalized, militarized, and alienated from the general public.

Just as airports have now been federalized, all transport systems will be under the jurisdiction of the security apparatus. Terrorism will continue as an ongoing bogey-man, justifying whatever security procedures are deemed desirable for social-control purposes. The whole security apparatus will have a monolithic quality to it, a similarity of character regardless of the specific security tasks or location. Everyone dressed in the same Evil Empire black outfits, with big florescent letters on the back of their flack jackets. In essence, the security apparatus will be an occupying army, the emperor's garrison in the provinces.

On a daily basis, you will need to go through checkpoints of various kinds, with varying levels of security requirements. This is where biometrics becomes important. If people can be implanted with chips, then much of the security can be automated, and everyone can be tracked at at all times, and their past activity retrieved. The chip links into your credit balance, so you've got all your currency always with you, along with your medical records and lots else that you don't know about.

There is very little left as regards national sovereignty. Nothing much in the way of foreign policy will have any meaning. With security marching to its own law and its distant drummer, the main role of so-called 'government' will be to allocate and administer the carbon-credit budget that it receives from the IPCC. The IPCC decides how much wealth a nation will receive in a given year, and the government then decides how to distribute that wealth in the form of public services and entitlements. Wealth being measured by the entitlement to expend energy.

In a fundamental sense, this is how things already are, following the collapse and the bailouts. Because governments are so deeply in debt, the bankers are able to dictate the terms of national budgets, as a condition of keeping credit lines open. The carbon economy, with its centrally determined budgets, provides a much simpler and more direct way of micromanaging economic activity and resource distribution throughout the globe.

In order to clear the way for the carbon-credit economy, it will be necessary for Western currencies to collapse, to become worthless, as nations become increasingly insolvent, and the global financial system continues to be systematically dismantled. The carbon currency will be introduced as an enlightened, progressive 'solution' to the crisis, a currency linked to something real, and to sustainability. The old monetary system will be demonized, and again the mythology will contain much that is true...The pursuit of money is the root of all evil, and the capitalist system was inherently evil. It encouraged greed, and consumption, and it cared nothing about wasting resources. People thought the more money they had, the better off they were. How much wiser we are now, to live within our means, and to understand that a credit is a token of stewardship.

Culturally, the post-capitalist era will be a bit like the medieval era, with aristocrats and lords on top, and the rest peasants and serfs. A definite upper class and lower class. Just as only the old upper class had horses and carriages, only the new upper class will be entitled to access substantial carbon credits. Wealth will be measured by entitlements, more than by acquisitions or earnings. Those outside the bureaucratic hierarchies are the serfs, with subsistence entitlements. Within the bureaucracies, entitlements are related to rank in the hierarchy. Those who operate in the central global institutions are lords of empire, with unlimited access to credits.

But there is no sequestering of wealth, or building of economic empires, outside the structures of the designated bureaucracies. Entitlements are about access to resources and facilities, to be used or not used, but not to be saved and used as capital. The flow of entitlements comes downward, micromanaged from the top. It's a dole economy, at all levels, for people and governments alike – the global regimentation of consumption. As regards regimentation, the post-capitalist culture will also be a bit like the Soviet system. Here's your entitlement card, here's your job assignment, and here's where you'll be living.

With the pervasive security apparatus, and the micromanagement of economic activity, the scenario is clearly about fine-grained social control, according to centralized guidelines and directives. Presumably media will be carefully programmed, with escapist trivia, and a sophisticated version of 1984-style groupthink propaganda pseudo-news, which is pretty much what we already have today. The non-commercial Internet, if there is one, will be limited to monitored, officially-designat ed chat sites, and other kinds of sanitized forums.

With such a focus on social micromanagement, I do not expect the family unit to survive in the new era, and I expect child-abuse alarmism will be the lever used to destabilize the family. The stage has been set with all the revelations about church and institutional child sexual abuse. Such revelations could have been uncovered any time in the past century, but they came out at a certain time, just as all these other transitional things have been happening. People are now aware that widespread child abuse happens, and they have been conditioned to support strong measures to prevent it.

Whenever I turn on the TV, I see at least one public-service ad, with shocking images, about children who are physically or sexually abused, or criminally neglected, in their homes, and there's a hotline phone number that children can call. It is easy to see how the category of abuse can be expanded, to include parents who don't follow vaccination schedules, whose purchase records don't indicate healthy diets, who have dubious psychological profiles, etc. The state of poverty could be deemed abusive neglect.

With the right media presentation, abuse alarmism would be easy to stir up. Ultimately, a 'child rights' movement becomes an anti-family movement. The state must directly protect the child from birth. The family is demonized...How scary were the old days, when unlicensed, untrained couples had total control over vulnerable children, behind closed doors, with whatever neuroses, addictions, or perversions the parents happened to possess. How did this vestige of patriarchal slavery, this safe-house den of abuse, continue so long to exist, and not be recognized for what it was? How much better off we are now, with children being raised scientifically, by trained staff, where they are taught healthy values.

Ever since public education was introduced, the state and the family have competed to control childhood conditioning. In religious families, the church has made its own contribution to conditioning. In the micromanaged post-capitalist future, with its Shock Doctrine birth scenario, it would make good sense to take that opportunity to implement the 'final solution' of social control, which is for the state to monopolize child raising. This would eliminate from society the parent-child bond, and hence family-related bonds in general. No longer is there a concept of relatives. There's just worker bees, security bees, and queen bees, who dole out the honey.

Postscript

This has been an extensive and somewhat detailed prognosis, regarding the architecture of the post-capitalist regime, and the transition process required to bring it about. The term 'new world order' is too weak a term to characterize the radical nature of the social transformation anticipated in the prognosis. A more apt characterization would be a 'quantum leap in the domestication of the human species'. Micromanaged lives and microprogrammed beliefs and thoughts. A once wild primate species transformed into something resembling more a bee or ant culture. Needless to say, regular use of psychotropic drugs would be mandated, so that people could cope emotionally with such a sterile, inhuman environment.

For such a profound transformation to be possible, it is easy to see that a very great shock is required, on the scale of collapse and social chaos, and possibly on the scale of a nuclear exchange. There needs to be an implicit mandate to 'do whatever is necessary to get society running again'. The shock needs to leave people in a condition of total helplessness comparable to the survivors in the bombed-out rubble of Germany and Japan after World War 2. Nothing less will do.

The accuracy of the prognosis, as prediction, is of course impossible to know in advance. However each part of the prognosis has been based on precedents that have been set, modus operandi that has been observed, trends that have been initiated, sentiments that have been expressed, signals that have been given, and actions that have been taken whose consequences can be confidently predicted.

In addition, in looking at all of these indicators together, one sees a certain mindset, an absolutist determination to implement the 'ideal solution', without compromise, using extreme means, and with unbridled audacity. World wars have been rehearsals for this historic moment. The police state infrastructure is in place and has been tested. The economy is in the process of collapse. The enemy is surrounded with missiles. Arbitrary powers have been assumed. If not now, the ultimate prize, then when will there be a better opportunity?

Our elite planners are backed up by competent think tanks, and they know that the new society must have coherence of various kinds. They've had quite a bit of experience with social engineering, nurturing the rise of fascism, and then engineering the postwar regimes. They understand the importance of mythology.

For example there is the mythology of the holocaust, where the story is all about extermination per se, and the story is not told of the primary mission of the concentration camps, which was to provide slave labor for war production. And some of the companies using the slave labor were American owned, and were supplying the German war machine. Thus does mythology, though containing truth, succeed in hiding the tracks and the crimes of elite perps, leaving others to carry the whole burden of historical demonization.

So I think there is a sound basis for anticipating the kinds of mythology that would be designed for leaving behind and rejecting the old ways, and seeing the new as a salvation. There is a long historical precedent of era changes linked with mythology changes, often expressed in religious terms. There will be a familiar ring to the new mythology, a remixing and re-prioritizing of familiar values and assumptions, so as to resonate with the dynamics of the new regime.

The nature of the carbon economy has been somewhat clearly signaled. Carbon budgets, and carbon credits, are clearly destined to become primary components of the economy. As we've seen with the elite and grassroots supported global warming movement, the arbitrary scarcity of carbon credits can be easily regulated on the pretext of environmentalism. And peak oil alarmism is always available as a backup. As elite spokespeople have often expressed, when the time comes, the masses will demand the new world order.

The focus on control over consumption, resources, and distribution is implicit in the emphasis on energy limits, is latent in the geopolitical situation, as regards depletion of global resources, and is indicated by the need for a new unifying paradigm, as the growth paradigm is no longer viable.

The nature of the security apparatus has been clearly signaled by the responses to demonstrations ever since 1998 in Seattle, by the increased use of hardened-killer mercenaries at home and abroad, by excessive and abusive police behavior, by airport security procedures, by Guantanamo and renditions, by the creation of a domestic branch of the army, dedicated to responding to civil emergencies, and by the way Katrina and Haiti have been handled.

It would be a major mistake to think of those last two as bungled operations. They were exercises in collapse management of a certain kind, to be applied to certain populations, where the training and equipment appropriate for combat in Afghanistan is seen as being appropriate for administering aid to civilian disaster victims. These selected disaster victims will be seen primarily as threats to civil order, or perhaps undesirables to be incarcerated or eliminated. They will be demonized as rioters and looters. Assistance will comes later, if at all. And it can all be broadcast on TV, and somehow be seen as the way things have to be. These two exercises were not bungled at all. They were alarmingly successful, most notably in the case of the realtime PR mythology.

The limited role of national governments, being primarily allocators of mandated budgets, has been clearly signaled by long-standing IMF policies in the third world, and by the way the bankers have been dictating to governments, in the wake of the over-extended bailout commitments. The carbon entitlement budgeting paradigm accomplishes the same micromanagement in a much more direct way, and is the natural outcome of the push toward hard carbon limits.

Montreal (Kitco News) -- Despite the elusiveness of confirmation of circulating rumors, some industry analysts said they would not be stunned if China emerged as the buyer of the remaining 191.3 tons of gold to be sold by the International Monetary Fund.

On Thursday reports emanating from Russian media said that China had bought the gold, but there has been no confirmation and sources for the story were dubious.

"I would not be surprised if China is buying the IMF gold," said James Turk, Editor and Founder of GoldMoney.com. "In fact, I have assumed all along that they bought it when India did, but did not announce the purchase then because President Obama was visiting China and China did not want to ruffle any diplomatic feathers."

He added, “Given the delayed disclosures China made to the IMF about its purchases earlier this decade and also the purchase they announced last summer long after it had been made, it is clear that China announces its purchases when it feels the need - not when they are made. “

The IMF had no comment on the rumors on Thursday when contacted by Kitco News. Some sources said the rumors briefly boosted gold futures prices on Thursday News surrounding the potential buyer began circulating as soon as the IMF announced the sale to the open market in mid-February.

Turk said that it is correct to assume that this IMF metal is not overhanging the market. “I believe the opposite to be the case. All indications to me are that physical metal remains tight. For that reason, I am expecting gold to surge in March and test overhead resistance at the $1200 record high before the end of March," he said.

Roger Wiegand , Editor of TraderTracks echoed the same views on a China buy. “I would think that China would want to buy gold, they were disappointed when India made the large purchase; consequently they missed out and they would like to buy more gold.”

Wiegand said that China is a big believer in gold, “They are gold miners, they buy on the open market and they have a great deal of American paper that they would rather trade for gold, so it makes a lot of sense.”

He said it was interesting that the China rumor coincided with the news that China’s Zhu Min, was appointed as special adviser to the IMF’s managing director. China has been waiting for years for an influential position at the IMF. While Zhu will not have direct influence in driving the IMF's policy agenda, he may have some impact on the margins.

Wiegand also said that if China does not emerge as the gold buyer, he sees India as the next likely candidate.

Mark Skousen, Editor of Forecasts & Strategies and Producer of FreedomFest thinks that the China story is still just a rumor but said it would not surprise him if they were the buyer. He said that China has had a long standing love affair with gold. “Gold is the ultimate protection against crisis, it only makes sense for China to buy the ultimate inflation hedge,” he told Kitco.com.

He said it would make for a very interesting situation if India also enters the picture and there would be several competing bids.

Overall, Skousen said that regardless of the buyer these numbers are not large amounts, “it represents no more than 5% of foreign exchange.”

David Morgan, founder of Silver-Investor.com, says that even though the amounts may not be huge, the message is strong. Morgan refers to when India purchased 200 tons, “Within the context of the gold market it is practically nothing, but in the context of psychology it means a big deal. It means that they would rather own gold than dollars.” he said. That same message would be further enforced with a China buy of gold, he said.

Friday, February 26, 2010

Subject: Washington Times picks up Architects and Engineers for 9/11 truth (WOW)

http://www.washingtontimes.com/news/...t=home_columns

EXPLOSIVE NEWS

A lingering technical question about the Sept. 11 terrorist attacks still haunts some, and it has political implications: How did 200,000 tons of steel disintegrate and drop in 11 seconds? A thousand architects and engineers want to know, and are calling on Congress to order a new investigation into the destruction of the Twin Towers and Building 7 at the World Trade Center.

"In order to bring down this kind of mass in such a short period of time, the material must have been artificially, exploded outwards," says Richard Gage, a San Francisco architect and founder of the nonprofit Architects & Engineers for 9/11 Truth.

Mr. Gage, who is a member of the American Institute of Architects, managed to persuade more than 1,000 of his peers to sign a new petition requesting a formal inquiry.

"The official Federal Emergency Management [Agency] and National Institute of Standards and Technology reports provide insufficient, contradictory and fraudulent accounts of the circumstances of the towers' destruction. We are therefore calling for a grand jury investigation of NIST officials," Mr. Gage adds.

The technical issues surrounding the collapse of the towers has prompted years of debate, rebuttal and ridicule.

He is particularly disturbed by Building 7, a 47-story skyscraper, which was not hit by an aircraft, yet came down in "pure free-fall acceleration." He also says that more than 100 first-responders reported explosions and flashes as the towers were falling and cited evidence of "multi-ton steel sections ejected laterally 600 ft. at 60 mph" and the "mid-air pulverization of 90,000 tons of concrete & metal decking."

There is also evidence of "advanced explosive nano-thermitic composite material found in the World Trade Center dust," Mr. Gage says. The group's petition at www. ae911truth.org is already on its way to members of Congress.

"Government officials will be notified that 'Misprision of Treason,' U.S. Code 18 (Sec. 2382), is a serious federal offense, which requires those with evidence of treason to act," Mr. Gage says. "The implications are enormous and may have profound impact on the forthcoming Khalid Shaikh Mohammed trial." --END

On Feb. 18, 2010, Joseph Andrew Stack flew his single-engine airplane into a seven-story office building in northwest Austin, Texas. The building housed an office of the Internal Revenue Service (IRS), along with several other tenants. According to a statement he posted to the Internet before taking off on his suicide flight, Stack intentionally targeted the IRS due to a long history of problems he had had with the agency. In the statement, Stack said he hoped that his action would cause “American zombies to wake up and revolt” against the government. Stack also expressed his hope that his message of violence would be one the government could not ignore.

Stack’s use of violence to attempt to foster an uprising against the government and to alter government policy means that his attack against the IRS building was an act of domestic terrorism. (Terrorism is defined by the intent of the actor, not the effectiveness of the attack, a topic we will discuss in more detail at another time.) While Stack’s terrorist attack ultimately will fail to attain either of his stated goals, he did succeed in killing himself and one victim and injuring some 13 other people. The fire resulting from the crash also caused extensive damage to the building. We have received credible reports that Stack had removed some of the seats from his aircraft and loaded a drum of aviation fuel inside the passenger compartment of his plane. This extra fuel may account for the extensive fire damage at the scene. According to STRATFOR analysts present at the scene, it appears that Stack’s plane struck the concrete slab between floors. Had the aircraft not struck the slab head-on, it may have been able to penetrate the building more deeply, and this deeper penetration could have resulted in even more damage and a higher casualty count.

For many years now, STRATFOR has discussed the security vulnerability posed by general aviation and cargo aircraft. Stack’s attack against the IRS building using his private plane provides a vivid reminder of this vulnerability.

Framing the Threat

As we have previously noted, jihadists, including al Qaeda’s central core, have long had a fixation on attacks involving aircraft. This focus on aviation-related attacks includes not only attacks designed to take down passenger aircraft, like Operation Bojinka, the 2001 shoe bomb plot and the Heathrow liquid explosives plot, but also attacks that use aircraft as weapons, as evidenced by the 9/11 strikes and in the thwarted Library Tower plot, among others — aircraft as human-guided cruise missiles, if you will. These aviation-focused plots are not just something from the past, or something confined just to the al Qaeda core leadership. The Christmas Day attempt to destroy Northwest Airlines Flight 253 demonstrated that the threat is current, and that at least some al Qaeda franchise groups (al Qaeda in the Arabian Peninsula, or AQAP, in this case) are also interested in aviation-focused plots.

Jihadists are not the only ones interested. Over the past several decades, a number of other actors have also conducted attacks against aviation-related targets, including such diverse actors as Palestinian, Lebanese, Japanese and Sikh militant groups, Colombian cartels, and the Libyan and North Korean intelligence services. Stack and people like Theodore Kaczynski, the “Unabomber,” demonstrate that domestic terrorists can also view aviation as a target and a weapon. (UNABOM is an FBI acronym that stood for university and airline bomber, the targets Kaczynski initially focused on.)

The long history of airline hijackings and attacks has resulted in increased screening of airline passengers and an increase in the security measures afforded to the commercial aviation sector. These security measures have largely been reactive, and in spite of them, serious gaps in airline security persist.

Now, while some security vulnerabilities do exist, it is our belief that any future plans involving aircraft as weapons will be less likely to incorporate highly fueled commercial airliners, like those used on 9/11. In addition to newer federal security measures, such as expansion of the air marshal program, hardened cockpits and programs to allow pilots to carry firearms, there has also been a substantial psychological shift among airline crews and the traveling public. As Flight 93 demonstrated on Sept. 11, 2001, the new “let’s roll” mentality of passengers and aircrews will make it more difficult for malefactors to gain control of a passenger aircraft without a fight. Before 9/11, crews (and even law enforcement officers traveling while armed) were taught to comply with hijackers’ demands and not to openly confront them. The expectation was that a hijacked aircraft and passengers would be held hostage, not used as a weapon killing all aboard. The do-not-resist paradigm is long gone, and most attacks involving aircraft since 9/11 have focused on destroying aircraft in flight rather than on commandeering aircraft for use as weapons.

Paradigm Shift

This change in the security paradigm has altered the ability of jihadists and other militants to plan certain types of terrorist attacks, but that is just one half of the repetitive cycle. As security measures change, those planning attacks come up with new and innovative ways to counter the changes, whether they involve physical security measures or security procedures. Then when the new attack methods are revealed, security adjusts accordingly. For example, the shoe bomb attempt resulted in the screening of footwear. AQAP shifted the attack paradigm by concealing explosives in an operative’s underwear. In the case of planners wanting to use aircraft as human-guided cruise missiles, one way the attack paradigm can be shifted is by turning their efforts away from passenger aircraft toward general aviation and cargo aircraft.

Most security upgrades in the aviation security realm have been focused on commercial air travel. While some general aviation terminals (referred to as FBOs, short for fixed base operators) have increased security in the post 9/11 world, like the Signature FBO at Boston’s Logan Airport, which has walk-through metal detectors for crews and passengers and uses X-ray machines to screen luggage, many FBOs have very little security. Some smaller airports like the one used by Stack have little or no staffing at all, and pilots and visitors can come and go as they please. There are no security checks and the pilot only has to make a radio call before taking off.

This difference in FBO security stems from the fact that FBOs are owned by a wide variety of operators. Some are owned by private for-profit companies, while others are run by a city or county authority and some are even operated by the state government. The bottom line is that it is very easy for someone who is a pilot to show up at an airport and rent an aircraft. All he or she has to do is fill out a few forms, present a license and logbook and go for a check ride. Mohamed Atta, the commander of the 9/11 operation, was a pilot, and one of the great mysteries after his death was the reason behind some of his general aviation activity. It is known that he rented small aircraft in cities like Miami and Atlanta, but it is not known what he did while aloft in them. It is possible that he was just honing his skills as a pilot, but there are concerns that he may also have been conducting aerial surveillance of potential targets.

But general aviation doesn’t just encompass small, single-engine airplanes like the ones owned by Stack and rented by Atta. Anyone with the money can charter a private passenger aircraft from a company such as NetJets or Flexjet, or even a private cargo aircraft. The size of these aircraft can vary from small Learjets to large Boeing Business Jets (a modified 737) and 747 cargo aircraft. In many places it is even possible for passengers to board a charter flight with no security checks of themselves or their baggage. In such a scenario, it would not be difficult for individuals such as Atta and his colleagues to take control of an aircraft from the crew — especially if the crew is unarmed.

As seen on 9/11, or even in the Stack case, there is very little that can be done to stop an airplane flown by a suicidal pilot. The North American Aerospace Defense Command launched two F-16 fighters in response to the Stack incident, but they were not dispatched until after the incident was over. Only in the case where there is restricted airspace that is constantly patrolled is there much hope of military aircraft responding in time to stop such an attack. The 1994 incident in which an unemployed Maryland truck driver crashed a stolen Cessna into the South Lawn of the White House highlighted how there is very little that can be done to protect a building from this type of threat — and the level of security at the White House in 1994 was far greater than the security afforded to almost any other building today. The difficulty of protecting buildings from aerial attack demonstrates the need to secure aircraft so they cannot be used in such a manner.

The bottom line, however, is that it would be prohibitively expensive to totally lock down all airports and aircraft nationwide in an effort to prevent them from being used in attacks like the one conducted by Stack. In the face of this reality, the best that can be hoped for is to keep the largest (and therefore most destructive) aircraft safe from this sort of misuse.

There is currently no one authority, like the Transportation Safety Commission, that controls security at all the small airports and FBOs. In the absence of any policy or regulations tightening the security at these facilities and requiring the screening of charter aircraft passengers, the best defense against the threat posed by this vulnerability will be to educate those in the FBO and charter aircraft business and encourage them to exercise a heightened state of situational awareness.

The apparent Israeli assassination of a Hamas operative in the United Arab Emirates turned into a bizarre event replete with numerous fraudulent passports, alleged Israeli operatives caught on videotape and international outrage (much of it feigned), more over the use of fraudulent passports than over the operative’s death. If we are to believe the media, it took nearly 20 people and an international incident to kill him.

STRATFOR has written on the details of the killing as we have learned of them, but we see this as an occasion to address a broader question: the role of assassination in international politics.Defining Assassination

We should begin by defining what we mean by assassination. It is the killing of a particular individual for political purposes. It differs from the killing of a spouse’s lover because it is political. It differs from the killing of a soldier on the battlefield in that the soldier is anonymous and is not killed because of who he is but because of the army he is serving in.

The question of assassination, in the current jargon “targeted killing,” raises the issue of its purpose. Apart from malice and revenge, as in Abraham Lincoln’s assassination, the purpose of assassination is to achieve a particular political end by weakening an enemy in some way. Thus, the killing of Adm. Isoroku Yamamoto by the Americans in World War II was a targeted killing, an assassination. His movements were known, and the Americans had the opportunity to kill him. Killing an incompetent commander would be counterproductive, but Yamamoto was a superb strategist, without peer in the Japanese navy. Killing him would weaken Japan’s war effort, or at least have a reasonable chance of doing so. With all the others dying around him in the midst of war, the moral choice did not seem complex then, nor does it seem complex now.

Such occasions rarely occur on the battlefield. There are few commanders who could not readily be replaced, and perhaps even replaced by someone more able. In any event, it is difficult to locate enemy commanders, meaning the opportunity to kill them rarely arises. And as commanders ask their troops to risk their lives, they have no moral claim to immunity from danger.

Now, take another case. Assume that the leader of a country were singular and irreplaceable, something very few are. But think of Fidel Castro, whose central role in the Cuban government was undeniable. Assume that he is the enemy of another country like the United States. It is an unofficial hostility — no war has been declared — but a very real one nonetheless. Is it illegitimate to try to kill such a leader in a bid to destroy his regime? Let’s move that question to Adolph Hitler, the gold standard of evil. Would it be inappropriate to have sought to kill him in 1938 based on the type of regime he had created and what he said that he would do with it?

If the position is that killing Hitler would have been immoral, then we have a serious question about the moral standards being used. The more complex case is Castro. He is certainly no Hitler, but neither is he the romantic democratic revolutionary some have painted him as being. But if it is legitimate to kill Castro, then where is the line drawn? Who is it not legitimate to kill?

As with Yamamoto, the number of instances in which killing a political leader would make a difference in policy or in the regime’s strength is extremely limited. In most cases, the argument against assassination is not moral but practical: It would make no difference if the target in question lives or dies. But where it would make a difference, the moral argument becomes difficult. If we establish that Hitler was a legitimate target, then we have established that there is not an absolute ban on political assassination. The question is what the threshold must be.

All of this is a preface to the killing in the United Arab Emirates, because that represents a third case. Since the rise of the modern intelligence apparatus, covert arms have frequently been attached to them. The nation-states of the 20th century all had intelligence organizations. These organizations carried out a range of clandestine operations beyond collecting intelligence, from supplying weapons to friendly political groups in foreign countries to overthrowing regimes to underwriting terrorist operations.

During the latter half of the century, nonstate-based covert organizations were developed. As European empires collapsed, political movements wishing to take control created covert warfare apparatuses to force the Europeans out or defeat political competitors. Israel’s state-based intelligence system emerged from one created before the Jewish state’s independence. The various Palestinian factions created their own. Beyond this, of course, groups like al Qaeda created their own covert capabilities, against which the United States has arrayed its own massive covert capability.Assassinations Today

The contemporary reality is not a battlefield on which a Yamamoto might be singled out or a charismatic political leader whose death might destroy his regime. Rather, a great deal of contemporary international politics and warfare is built around these covert capabilities. In the case of Hamas, the mission of these covert operations is to secure the resources necessary for Hamas to engage Israeli forces on terms favorable to them, from terror to rocket attacks. For Israel, covert operations exist to shut off resources to Hamas (and other groups), leaving them unable to engage or resist Israel.

Expressed this way, covert warfare makes sense, particularly for the Israelis when they engage the clandestine efforts of Hamas. Hamas is moving covertly to secure resources. Its game is to evade the Israelis. The Israeli goal is to identify and eliminate the covert capability. Hamas is the hunted, Israel the hunter here. Apparently the hunter and hunted met in the United Arab Emirates, and the hunted was killed.

But there are complexities here. First, in warfare, the goal is to render the enemy incapable of resisting. Killing just any group of enemy soldiers is not the point. Indeed, diverting resources to engage the enemy on the margins, leaving the center of gravity of the enemy force untouched, harms far more than it helps. Covert warfare is different from conventional warfare, but the essential question stands: Is the target you are destroying essential to the enemy’s ability to fight? And even more important, as the end of all war is political, does defeating this enemy bring you closer to your political goals?

Covert organizations, like armies, are designed to survive attrition. It is expected that operatives will be detected and killed; the system is designed to survive that. The goal of covert warfare is either to penetrate the enemy so deeply, or destroy one or more people so essential to the operation of the group, that the covert organization stops functioning. All covert organizations are designed to stop this from happening.

They achieve this through redundancy and regeneration. After the massacre at the Munich Olympics in 1972, the Israelis mounted an intense covert operation to identify, penetrate and destroy the movement — called Black September — that mounted the attack. Black September was not simply a separate movement but a front for various Palestinian factions. Killing those involved with Munich would not paralyze Black September, and destroying Black September did not destroy the Palestinian movement. That movement had redundancy — the ability to shift new capable people into the roles of those killed — and therefore could regenerate, training and deploying fresh operatives.

The mission was successfully carried out, but the mission was poorly designed. Like a general using overwhelming force to destroy a marginal element of the enemy army, the Israelis focused their covert capability to destroy elements whose destruction would not give the Israelis what they wanted — the destruction of the various Palestinian covert capabilities. It might have been politically necessary for the Israeli public, it might have been emotionally satisfying, but the Israeli’s enemies weren’t broken. Consider that Entebbe occurred in 1976. If Israel’s goal in targeting Black September was the suppression of terrorism by Palestinian groups, the assault on one group did not end the threat from other groups.

Therefore, the political ends the Israelis sought were not achieved. The Palestinians did not become weaker. The year 1972 was not the high point of the Palestinian movement politically. It became stronger over time, gaining substantial international legitimacy. If the mission was to break the Palestinian covert apparatus to weaken the Palestinian capability and weaken its political power, the covert war of eliminating specific individuals identified as enemy operatives failed. The operatives very often were killed, but the operation did not yield the desired outcome.

And here lies the real dilemma of assassination. It is extraordinarily rare to identify a person whose death would materially weaken a substantial political movement in some definitive sense — i.e., where if the person died, then the movement would be finished. This is particularly true for nationalist movements that can draw on a very large pool of people and talent. It is equally hard to reduce a movement quickly enough to destroy the organization’s redundancy and regenerative capability. Doing so requires extraordinary intelligence penetration as well as a massive covert effort, so such an effort quickly reveals the penetration and identifies your own operatives.

A single swift, global blow is what is dreamt of. Covert war actually works as a battle of attrition, involving the slow accumulation of intelligence, the organization of the strike, the assassination. At that point, one man is dead, a man whose replacement is undoubtedly already trained. Others are killed, but the critical mass is never reached, and there is no one target who if killed would cause everything to change.

In war there is a terrible tension between the emotions of the public and the cold logic that must drive the general. In covert warfare, there is tremendous emotional satisfaction to the country when it is revealed that someone it regards as not only an enemy, but someone responsible for the deaths of their countryman, has been killed. But the generals or directors of intelligence can’t afford this satisfaction. They have limited resources, which must be devoted to achieving their country’s political goals and assuring its safety. Those resources have to be used effectively.

There are few Hitlers whose death is morally demanded and might have a practical effect. Most such killings are both morally and practically ambiguous. In covert warfare, even if you concede every moral point about the wickedness of your enemy, you must raise the question as to whether all of your efforts are having any real effect on the enemy in the long run. If they can simply replace the man you killed, while training ten more operatives in the meantime, you have achieved little. If the enemy keeps becoming politically more successful, then the strategy must be re-examined.

We are not writing this as pacifists; we do not believe the killing of enemies is to be avoided. And we certainly do not believe that the morally incoherent strictures of what is called international law should guide any country in protecting itself. What we are addressing here is the effectiveness of assassination in waging covert warfare. Too frequently, it does not, in our mind, represent a successful solution to the military and political threat posed by covert organizations. It might bring an enemy to justice, and it might well disrupt an organization for a while or even render a specific organization untenable. But in the covert wars of the 20th century, the occasions when covert operations — including assassinations — achieved the political ends being pursued were rare. That does not mean they never did. It does mean that the utility of assassination as a main part of covert warfare needs to be considered carefully. Assassination is not without cost, and in war, all actions must be evaluated rigorously in terms of cost versus benefit.

About Me

ROLAND SAN JUAN was a researcher, management consultant, inventor, a part time radio broadcaster and a publishing director. He died last November 25, 2008 after suffering a stroke. His staff will continue his unfinished work to inform the world of the untold truths. Please read Erick San Juan's articles at: ericksanjuan.blogspot.com This blog is dedicated to the late Max Soliven, a FILIPINO PATRIOT.
DISCLAIMER - We do not own or claim any rights to the articles presented in this blog. They are for information and reference only for whatever it's worth. They are copyrighted to their rightful owners.
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